Bid for Parkview hospital stalls on dispute with state over review process

BRUNSWICK, Maine — Central Maine Healthcare’s bid to acquire Parkview Adventist Medical Center in Brunswick has been delayed by a disagreement with the state about its review process, according to state and health system officials.

CMHC announced Thursday that it had asked the Maine Department of Health and Human Services to suspend its application for the merger for up to a year. The health system, parent to Lewiston’s Central Maine Medical Center, filed the application in August 2012 seeking approval from DHHS’ Certificate of Need program.

Chuck Gill, vice president for public affairs at CMHC, said his organization requested the suspension to conduct a feasibility study “about the future of Parkview” at the prompting of DHHS officials.

The state agency informed CMHC at a Jan. 17 meeting that it would not recommend approval of the application, said Kenneth Albert, director of the department’s Division of Licensing and Regulatory Services, which oversees the Certificate of Need program. A preliminary review of the merger was due for release 10 days after the meeting, he said Friday.

Under the Certificate of Need program, the state reviews proposals for major hospital projects to determine if the added services are needed or whether they aren’t already offered at nearby facilities. Each project is recommended for approval or denial, with the final ruling made by the DHHS commissioner.

Among the criteria is whether the proposed project is “economically feasible.”

“[CMHC’s] application really failed to address economic feasibility,” Albert said. “They’ve extrapolated that to imply that a feasibility study would be helpful. Most often, the application is submitted with a feasibility study.”

CMHC agreed to submit the additional information by Feb. 26, but on Thursday notified DHHS of the request for a suspension, Albert said.

CMHC had sought a “simplified” review process for the proposed merger, he said. Maine statute allows that in some cases, but DHHS decided that the Parkview proposal required a more expanded review that includes public hearings, he said. The state agency informed CMHC of its decision shortly after the health system submitted a letter of intent in June 2012, Albert said.

CMHC nonetheless submitted its application two months later, on Aug. 28, 2012, without the required information, he said.

“They knew what we were going to be looking for,” Albert said. “We just never got the information.”

Gill offered a different version of events, saying CMHC was under the impression when it submitted the application that it qualified for the simplified review.

“We believed the application did qualify for simplified review, and the department feels otherwise,” he said Friday.

In the past, DHHS has granted simplified review to similar applications from other health care facilities, he said. CMHC’s Certificate of Need application cites MaineHealth’s 2010 acquisition of Pen Bay Healthcare in Rockland, its 2009 acquisition of Southern Maine Medical Center in Saco, and its 2008 merger with Waldo County Healthcare.

“That’s how every other application has been reviewed,” Gill said.

He declined to specify what information the feasibility study would include. On Thursday, Gill said DHHS requested information “about the future of Parkview and what the organizations will be doing to make sure Parkview can thrive in the future.”

“We’re answering questions regarding further information the department’s requested, and that’s as far as I want to go with it,” Gill said.

In its application, CMHC said no additional capital or operating costs were anticipated as a result of the transaction with the 55-bed hospital. No changes in services, the number of hospital beds or new equipment was planned, the health system said.

After suffering losses of more than $800,000 in both 2009 and 2010, Parkview posted an operating gain of $1.5 million in 2011, according to the application.

“While CMHC and Parkview have every intention to continue profitable operations at Parkview, CMHC does have the ability to sustain any foreseeable operating losses incurred by member entities,” the application states.

The merger would put CMHC in a better position to protect an $8.6 million loan it made to Parkview as the hospital “begins to benefit from the fiscal benefits from this transaction,” the application states.

CMHC remains confident that Parkview will become a part of the health system in the future, Gill said.

Steve Trockman, director of community relations and outreach at Mid Coast Hospital, said Thursday that Mid Coast would not take any action as a result of CMHC’s suspended application, “at least not immediately.”